Market Savvy | Savvy Confidential / A Briefing for Investors

Heavy Snowfall Gives Vail's Stock a Lift

A white Christmas is warming the hearts of Vail Resorts Inc. shareholders.

Vail's stock (ticker symbol: MTN) has risen 28% in the last three weeks as heavy snowfall in Colorado appears to have salvaged the season for the biggest U.S. ski resort operator.

The shares climbed from an eight-month closing low of $15.94 on Dec. 2 to $20.38 Thursday on the NYSE. By comparison, the Russell 2,000 index of smaller stocks rose just 5% in the last three weeks.

Vail Resorts said Tuesday that 3 1/2 feet of snow fell on Vail Mountain the previous five days, allowing it to open portions of its popular Back Bowls ski runs. The storms eased concerns that light bookings at Vail's resorts over the New Year's holiday will hurt earnings.

"Anybody who was worried that there wasn't anything to ski on doesn't have to worry about it," said Bear, Stearns & Co. analyst Jason Ader.

Chairman and Chief Executive Adam Aron said earlier this month that he had been disappointed by softer-than-normal bookings at Vail's lodges this quarter, especially over New Year's weekend.

Analysts have been cutting their estimates of Vail Resorts' earnings. The company is expected to earn 46 cents a share in its fiscal second quarter ending in January, according to the average estimate of eight analysts polled by First Call Corp. That is 5 cents less than analysts forecasted 30 days ago.

In its quarter ending in April, Vail is forecast to earn $1.06 a share, 3 cents less than was expected 30 days ago.

Even with the recent advance, Vail shares are down 17% in the last year, as light snow and warm weather in Colorado last ski season cut earnings.